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'If people can buy shoes and clothes online they'll definitely want to do it with cars:' Shift Co-CEO

·Markets Reporter
·2 min read
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Shift Technologies’ (SFT) co-CEO Toby Russell sees massive growth opportunities ahead for the peer-to-peer vehicle marketplace.

“This is an $840 billion market, and collectively, between Vroom (VRM), Carvana (CVNA) and Shift, we represent less than 1%” of vehicles bought online, Russell told Yahoo Finance Live.

“If people can buy shoes and clothes online they’ll definitely want to do it with cars,” he said.

“The problem is they haven’t been able to in the past because the old retail model doesn’t allow for that,” he added.

On Thursday the company reported its first quarterly results since going public via a SPAC this year. Revenue grew a record 31% year-over-year to nearly $60 million. Total units sold were up 34% and e-commerce sales grew 35%.

The stock however was down 26% on Friday. Wedbush Securities cut its rating on Shift by a double notch to Underperform from Outperform. Part of the rating cut had to do with the company’s marketing spend strategy.

A long line of unsold 2020 Hyundai models sits in a storage lot Thursday, Sept. 3, 2020, in Centennial, Colo. (AP Photo/David Zalubowski)
A long line of unsold 2020 Hyundai models sits in a storage lot Thursday, Sept. 3, 2020, in Centennial, Colo. (AP Photo/David Zalubowski)

“We are investing in growing our marketing in particular so that we can build brand, and have that long term shareholder value return,” said Russell.

“We did reduce our gross profit per unit guidance in Q4, in line with seeking to continue growing and investing in the long run,” he added.

Russell says the company’s inventory differentiates itself from the competition.

“We sell cars all the way down to less than $10,000 in cost, and all the way up into the 30s with an average selling price in sort of the $17,000 range. Whereas the others tend to sell more expensive cars,” said Russell.

Shift’s value segment has been outperforming. During the company’s earnings call on Thursday evening, executives highlighted through the end of August, 29% of sales were in the value segment. That percentage came in higher than initially anticipated.

One analyst on the call questioned the company’s decision to hold a Black Friday campaign and the impact it could have on GPU. The company’s leadership noted, “We want to drive growth and take that impact because of our strategic goal of expanding and driving continued growth both in Q4 and into next year.”

Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre

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